At Worldchanging, TerraPass founder Adam Stein writes about San Francisco's $23 million experiment with "smart" parking meters, whose prices rise and fall according to demand.

Mr. Stein notes that the meters are an attempt to find an alternative to traditional means of easing traffic congestion:

The traditional solution is to increase the number of spots, providing yet another subsidy to drivers and pushing yet another cost onto everybody else. More important, fiddling with supply doesn't really work any more so than building an extra lane on a highway relieves congestion. Oversupply of parking encourages driving. Undersupply creates a lottery system, in which people circle endlessly looking for a spot or choose to park illegally. In either case, the result is more congestion, more carbon emissions, and less livable cities.

The solution? Meters that adjust parking rates based on the time of day, the day of the week, and the duration of the stay.

The idea is that people will be less inclined to drive during peak times if they know that it will cost them more; with more open spaces, those who have to drive will spend less time cruising around in search of a spot.

The project, known as SFPark and run by the city's Municipal Transportation Agency, will cover about 6,425 metered curbside parking spots – about one-quarter of all the spaces in the city – as well as the 11,677 spaces in lots and garages managed by the agency. It is set to begin in September and will run for at least one year before being considered for the entire city.

The federal government is paying $18 million of the $23 million budgeted.

People would be able to pay not just with coins, but with credit cards, prepaid debit cards and even by cell phone. If a meter is set to expire, a text message could be sent to the driver. More time could be purchased remotely.

People also would be able to check parking availability before arriving at their destination via the Internet, handheld devices such as BlackBerrys, or cell phone. Sensors would be embedded in the asphalt to keep track of when a parking spot is empty.

Stein notes that a similar scheme has been under way in New York City, which plans to convert all of its old parking meters to Muni Meters by 2009. These meters are located around a group of parking spots, with no lines separating the spots. Instead, they allow as many cars to park as can fit. New York's Muni Meters currently charge a flat rate but are also programmed for variable pricing. As Stein says, "it's only a matter of time before someone flips the switch."